According to housing figures from the Australian Bureau of Statistics released yesterday, house prices posted their first annual gain in six quarters, up 0.3 per cent from a year earlier. The weighted average price across eight capital cities has also risen 0.3 per cent since the June quarter, when they fell a revised 1.9 per cent.

In announcing its decision, RBA governor
Glenn Stevens
noted that the housing market had strengthened and savers faced “increased incentives to look for assets with higher returns". But market watchers said there was no sign of an unhealthy acceleration in house prices and the RBA should ease monetary policy even further.

“I don’t think inflation [in the housing market] is a concern," said Macroplan economist Jason Anderson. “The house price data isn’t particularly exciting. I don't think it’s strong enough to get momentum back in terms of residential building, a key area where we need to see improvement to offset the [anticipated] slowdown from mining."

RP Data head of research Tim Lawless said there had only been a modest uptick in dwelling values and transaction volumes, suggesting consumers were responding slowly to rate cuts. Other signs of a sluggish improvement in market conditions were falls in average selling times and rates of vendor discounting.

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“From a housing market perspective, I would have to assume the RBA is reasonably comfortable with the current performance of the market," Mr Lawless said. “Further rate cuts are . . . likely to provide another round of stimulus, however the key factor will be improved consumer confidence, which has remained stubbornly low despite the low interest rate."

Quarterly house prices rose the most in Perth, by 1.8 per cent, followed by 0.4 per cent in Brisbane, 0.3 per cent in Sydney and 0.2 per cent in Melbourne. Canberra was the worst performing capital city market, falling 1.1 per cent, followed by slides of 0.6 per cent in Adelaide and 0.5 per cent in Darwin.

LJ Hooker deputy chairman Janusz Hooker said a rate cut in December would be too late to boost this year’s key selling season. “The market is being dragged down by a [low] consumer confidence, so this is a missed opportunity to give housing a little kick along when it is needed."